Web 2.0 spending to approach $5 billion

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Spending on blogging, wikis, social networking and other Web 2.0 technologies is set to grow rapidly over the next five years, to reach $4.6 billion (£2.3 billion). Growth will be driven by investments by consumer giants such as McDonalds and General Motors.

Companies are using the technologies to improve the way they interact with customers, as much as they are using Web 2.0 to develop products and services in their own right. So, although media businesses have made strategic investments in the sector - such as News Corp's purchase of MySpace - companies will also turn to next-generation web technologies to improve areas such as pre-sales service and customer support.

Research firm Forrester analysed seven leading technologies, including blogging, wikis, RSS, social networks, podcasts and widgets. Of these, social networks will attract by far the greatest levels of investment, driven by the large sums being spent by the media companies, said Forrester research analyst Oliver Young.

In the wider enterprise space, businesses will increasingly have to choose between best-of-breed Web 2.0 technologies from niche or emerging vendors, and the "bundled" tools provided by operating system, middleware and business application vendors.

Microsoft provides blogging engines for free as part of its SharePoint collaboration server, for example, and Apple includes blogging, wikis and podcasting tools as part the Leopard release of its Mac OS Server. Enterprise software vendors such as Oracle and SAP are also expected to bolster their Web 2.0 tools further over the next few years.

As a result, specific spending on Web 2.0 will be hard to track, with some vendors using Web 2.0 or semantic web technologies to boost sales of existing products, rather than to create new applications.

"There is a level of comfort from turning to an existing vendor, especially if it is a large vendor. It is safe and reliable," Young told IT PRO. "That is especially the case if the back end integration is not too difficult. But they might not be moving as fast as smaller vendors. If you want to be on the cutting edge, you might have to turn to an emerging vendor."

Despite predictions for rapid growth, Forrester cautions that overall investments in Web 2.0 remain small. Spending this year in the field reached $768 million (£384 million). But that is still two-tenths of one per cent of the global software market, Young said.

Separate research released late last year found that UK businesses were failing to grasp the Web 2.0 opportunity.

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